Earlier this year the IRS announced the “Fresh Start” program. The IRS implemented this program to provide relief to struggling taxpayers. I discussed the need for program in my blog posting, “IRS Overwhelmed by Offer in Compromise Requests, Changes Made.” I must admit that I was a little skeptical of this program in the beginning. But now I am a believer.
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IRS Fiscal year 2011 Data Book
The IRS issued their fiscal year 2011 Data Book. The 2011 Data Book provides a snap snapshot of agency activities for the year. For example, the IRS collected $2.4 trillion and processed more than 234 million tax returns. Below are some interesting statistics related to tax resolution.
82% of annual individual tax returns selected for audit resulted in a change. On average, the changes made resulted in about $11,000 of additional taxes per return.
71% of annual business tax returns selected for audit resulted in a change. On average, the changes made resulted in about $850,000 of additional taxes per return.
30% of the annual individual income tax returns selected for audit claimed the Earn Income Tax Credit (EITC).
The IRS Substitute for Return program resulted in $14.4 billion of additional taxes.
The IRS assessed $31 billion in penalties. The IRS abated $11 billion in penalties.
On average, 34% of individual penalties were abated and 44% of business penalties were abated.
There were 59,000 Offer in Compromises (settlements) filed. 33% of the offers submitted were accepted.
IRS issued 3.7 billion levies. This is an increase of 4% compared to 2010.
If you need relief from the IRS, ALG Tax Solutions, P.C. can help. Call us at 855-MI-TaxHelp. (855-648-2943)
IRS Circular 230 Disclosure: To the extent this writing contains advice on a federal tax issue, the advice is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.
Do not let your taxes snowball out of control (Part One)
I have helped a considerable number of clients resolve their back taxes. One thing that surprises most of my clients is the sheer amount of taxes, interest, and penalties owed. How do people get into this situation? Owing taxes can be compared to a snowball that starts to roll from the top of a hill and gets increasingly larger as the snowball progresses down the hill toward the bottom. Given a long ride, that snowball gets too big to handle. The following narrative, which includes name and location changes to protect client confidentiality, demonstrates how back taxes can erupt out of control. Continue reading…
Can I really settle my taxes for less than I owe?
The simple answer to this question is maybe. The more accurate answer, it depends on your current financial situation because not all taxpayers qualify. Even if you are qualified by IRS criteria, the resolution process can be lengthy and expensive.